Groupon bulks up board, Mason cuts his pay

(Crain's) — Groupon Inc. founder and CEO Andrew Mason was paid $756.72 in salary last year, at his request, according to documents filed today with the Securities and Exchange Commission.

Mr. Mason received no bonus last year. All told, he received total compensation of $7,943. That compares with his 2010 total pay of $184,599.

He opted not to take his 2011 salary of $180,000, nor his bonus worth up to $90,000, according to the proxy.

Most of Mr. Mason's wealth comes from his stock holdings in the company he founded. He purchased 3.6 million shares for $144,000 in 2009, a year after Groupon was launched. Because of stock splits, he now has 46.9 million shares that have a value of $502 million based on today's new-low closing price.

The stock has dropped 39 percent since March 30, when the company revised its financial results and disclosed accounting problems.

Jeffrey Holden, a senior vice president who joined Groupon in April, received total compensation of $13.5 million, thanks to $11.5 million worth of restricted stock he received when his Seattle-based mobile software company, Pelago, was bought by Groupon. His base pay was $205,000 and his bonus was $1.8 million, according to the company's proxy report.

According to a recent securities filing, 156,250 shares of restricted stock vested this month. The rest will vest monthly over five years.

Margo Georgiadis

Margo Georgiadis, who resigned in September as president and chief operating officer, appeared to be the highest-paid executive of 2011 with a total compensation package of $27.2 million — but the bulk of that money, $27 million in restricted stock, disappeared when she left Groupon. She retained 200,000 shares of restricted stock now valued at $2.1 million.

Jason Child, chief financial officer hired from Amazon.com before Groupon went public, was paid $350,000 in salary and a $500,000 bonus. He received 100,000 shares of restricted stock last year. At the end of 2011, he had 1 million shares of restricted stock, which vest quarterly over time, worth about $11 million.

David Schellhase, general counsel who joined from Salesforce.com, received $168,750 in salary, $192,260 in bonus and 437,500 shares of restricted stock worth about $4.7 million.

Also disclosed in today's proxy report was that Starbucks Corp. founder Howard Schultz and venture capitalist Kevin Efrusy will be stepping down from Groupon's board of directors.

They'll be replaced by Daniel Henry, chief financial officer of American Express Co., who was appointed to the board April 26; and Robert Bass, vice chairman of accounting giant Deloitte LLP, who will seek election at the company's annual meeting June 19.

Messrs. Henry and Bass, both 62, will add experience and financial credibility to a company that has been reeling from a series of missteps, including a recent revision of financial results and disclosure of weakness in its internal accounting controls.

“The street is focused on Howard Schultz leaving, but I view this as a step in the right direction in terms of trying to get their act together on the finance side,” says Herman Leung, an analyst at Susquehanna International Group. “They're going to be in the penalty box for a couple quarters.”

The news came on a day when Groupon's share price set a new low. The stock plunged 10 percent to $10.71, sliding below $11 for the first time.

Mr. Schultz joined the board in early 2011 after investing in the company. Mr. Efrusy is a partner at Accel Ventures, one of the early venture-capital funds that invested in Groupon in 2009.

Groupon had been signaling in recent weeks that it might rearrange its board following its IPO last fall. But the company came under scrutiny as needing more oversight, especially on the accounting side, after Groupon revised its financials on March 30 and reported a weakness in internal financial controls.